The Evolution of Optimization Technologies

Dan Basmajian, a pioneer in supply chain optimization technology, says the next evolutionary step in optimization technology will be enablement of global optimization across many functional areas within a supply chain. Basmajian currently is CEO of Optricity, whose primary product is a slotting optimization tool.

Until now, optimization solutions have been constrained by the junctures at which different software or systems meet, he says. Where two or more systems meet is a weak spot. This happens because a warehouse management system, for example, is written to optimize warehouse functions, but the people who wrote that software probably don't know anything about transportation, "so there is a weakness where transportation management systems meet warehouse management systems," he says. "It is at these junctures where optimization could really be helpful, but that requires developing a solution that can understand multiple systems at one time.

This can be done by taking the five solution techniques that apply across the supply chain -- routing, assignment, scheduling, sequencing and queuing - and applying optimization to each of those to come up with a globally optimal solution, he says. "These five functions are applicable in about 80 percent of all supply chain problems," says Basmajian. "We can look at each function with an eye on global optimization and do a much better job generating answers that will get us close to end-to-end supply chain optimization, without making a large financial commitment up front."

Another constraint to optimization has been its foundation in the academic community, he says. "Academic solutions when applied in the real world sometimes do not generate useable answers," Basmajian notes. "One of the approaches we have found that works is to modify mathematics to fit the real world, problem rather than trying to recast a real world problem to fit into an academic solution."